Bridget Foley’s Diary: Views on Sustainability: Victor Luis

WWD: How does a manufacturing-based industry like fashion reconcile growth with sustainability?

Victor Luis: Being sustainable is simply good business. If we’re using less energy or less water, and more sustainable materials that reduce overall costs, lessen environmental impacts and drives revenue, that’s a benefit on many levels.

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We do believe in being a better member of the global community by being aware of how much electricity we’re using, what role water plays across the organization; those are all areas where we have created specific targets and on which we report annually, in our Corporate Responsibility Report. I don’t think it’s one or the other — you don’t have to sacrifice growth for sustainability, or vice versa. Good performance in areas of sustainability has been linked to better performance overall. We focus on growing responsibly by factoring in the UN Sustainable Development Goals, and what’s important to our customers, our employees and the communities in which we operate when making business decisions.

WWD: Is it realistic for growth-dependent public companies to put concern for the environment before shareholder return?

V.L.: Black Rock is one of our largest shareholders, and in chief executive officer Larry Fink’s 2019 letter “Purpose & Profit” addressed to ceo’s, he said, “Purpose is not the sole pursuit of profits but the animating force for achieving them. And profits are in no way inconsistent with purpose; in fact, profits and purpose are inextricably linked.”

Sustainable, Responsible and Impact Investing (SRI Assets) in the U.S.: According to the U.S. SIF (U.S. Forum for Sustainable and Responsible Investment) Foundation’s 2018 Report on U.S. SRI trends, as of year-end 2017, more than one out of every four dollars under professional management in the U.S. — $12 trillion or more — was invested according to SRI strategies.

These indices and funds include:

• The Dow Jones Sustainability Index
• Fidelity U.S. Sustainability Index Fund
• Fidelity International Sustainability Index Fund
• Calvert is a leader in responsible investing and offers a broad array of mutual funds that leverage their socially responsible investing expertise.

We now live in a world where so many investors are signatories to the UN Principles for Responsible Investment/PRI. They are really looking at companies’ ESG performance as well as overall global growth. This gives growth-focused public companies who are conscious of their environmental impacts an opportunity to demonstrate this in a way that is meaningful for investors and the planet.

Our values of Optimism, Innovation and Inclusivity are the foundation for everything that we do — from product development to our philanthropic work, and how we engage with our customers and members of the greater community.

We realize we have a tremendous opportunity to affect real change, and to take a leadership position in our industry by encouraging collaboration and commitments toward addressing global issues, such as climate change, responsible production and consumption, gender equality and decent work and economic growth.

WWD: I’ve seen “the triple-bottom line” noted in reference to companies that look at their social, environmental and financial impact. Is it realistic for them to put the financial consideration third?

V.L.: These impacts are not ranked, rather we consider them holistically. If being socially environmentally responsible has a positive financial impact in that it lowers costs, drives sales and in addition, creates happiness for consumers, then that’s just good business.

We do not see financial consideration as third place after social and environmental impacts. Rather, we look at these together to find the nexus between all three.

For example, looking at the leather we use in our handbags, we make a financial profit from selling that handbag. And because we source Leather Working Group-certified leather, we know that there are strict practices in place to ensure that the leather that is being treated is done so in an ethical and environmentally sound way. This in turn reduces impacts in the communities where the leather is produced.

WWD: Fashion is very focused on nurturing young talent and young businesses with mentorships and competitive prizes, etc. But when a new company launches it doesn’t mean that an older, established company shutters. So no matter how ecologically responsible each tries to be, there’s still more being produced. Thus, are those two concepts — nurturing nascent businesses and lessening the overall environmental footprint — antithetical?

V.L.: Why does it have to be old versus young? This is not a zero-sum game. We have a growth mind-set, and these newer businesses have an advantage — they can implement a socially responsible business model from the beginning. They have a lot to teach us [more established businesses] in that regard.

Young people are looking at things differently. Nurturing young talent provides an opportunity for established companies to glean from their perspectives and fresh ideas. Millennials and Gen Z in particular are focused less on consumption and more on sustainability issues. This is an area of great interest to them — they care about how the products they purchase are made, and where they come from. They’re involved in the conversation, and they’re consider the holistic aspects of a business when making purchasing decisions.

While you can nurture new business and new talent, it also raises the benchmark for established companies to implement more sustainable practices that perhaps they may not have considered previously.

WWD: Those at the luxury and higher-priced spheres of fashion often point to fast fashion as the primary culprit of apparel waste. But there is a lot of expensive merch out there, too. At some point do companies have to make the decision to produce less, even if it means a hit to the bottom line?

V.L.: We strive to forecast our product sales as accurately as we can. Not only does this prevent financial losses, it also prevents excess inventory. Not all forecasts are accurate, and there are instances where we need to distribute or donate excess inventory or materials.

We produce investment pieces consumers love that last longer, and that consumers use for longer periods of time, that are often handed down from generation to generation.

In partnership with our foundations, we’ve donated excess inventory to various organizations, including Dress for Success, the Lower East Side Girls’ Club, Caring for Others and the International Rescue Committee — to name a few.

Additionally, when we have left over raw materials from product sampling, we partner with Materials for the Arts and ReFashionNYC to make sure that those are responsibly donated. With materials that are too small to donate to MFTA or ReFashionNYC, we use FabScrap, a New York-based fabric recycling company.

We also operate a repair shop in Carlstadt, N.J., that has a staff of full-time craftsman, dedicated to making sure our customers can keep their leather goods for many years.

WWD: The personal aspect (a bit off-topic but intriguing). Fashion is about putting our best selves out there to the world. Fashion plays into the urge to self-adorn that’s as old as humanity itself. Should sustainability initiatives take into account fashion’s positive psychological impact on individuals, an impact dependent upon the stuff of fashion, the production of which takes a toll on the environment?

V.L.: Humanity itself takes the biggest toll on the environment. We are constantly innovating: how do we do this in a way that’s more sustainable for future generations?

Fashion takes into account the internal perspective rather than the external perspective. Marie Kondo’s mantra is a great example: we’re here to spark joy by creating products our consumers connect with, products that are relevant to their lifestyles.

Fashion is tremendously personal and it’s a form of self-expression. Consumers are making savvier decisions about what they purchase, and who they purchase from. Essentially, sustainability is in fashion.

Sustainability is certainly on our strategic agenda. Viewing your business through a sustainability lens helps create a better business. One that is resilient and responsive to employees, customers and society in general.

In addition to achieving a more sustainable business model, we are continuously striving to surprise and delight our customers. We continue to drive customer engagement through innovative product and excellent store experiences, all supported by a sustainable foundation.

Individuals now are able to make choices that are better for the planet, and still feel that positive psychological impact that fashion provides.

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